Lindenwood Female College, doing business as Lindenwood University v. Zurich American Insurance Company

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 21-3738
___________________________
Lindenwood Female College, doing business as Lindenwood University
Plaintiff Appellant
v.
Zurich American Insurance Company
Defendant Appellee
____________
Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
____________
Submitted: September 21, 2022
Filed: March 2, 2023
____________
Before GRUENDER, MELLOY, and ERICKSON, Circuit Judges.
____________
MELLOY, Circuit Judge.
Lindenwood Female College (Lindenwood) asserted class action claims against
its casualty insurer, Zurich American Insurance Company (Zurich), alleging a
wrongful denial of coverage for COVID-19 business interruption at its Missouri and

-- 1 of 5 --

Illinois properties. The district court1 granted Zurich’s motion to dismiss, finding no
plausible allegation of coverage. Fed. R. Civ. P. 12(b)(6). We affirm.
Lindenwood, like many other entities, temporarily restricted in-person services
and activities in 2020 due to COVID-19 concerns. Later, Lindenwood sought
coverage under several provisions of its policy, all of which directly or indirectly
depended on the occurrence of “physical loss” or “physical damage.”
Our Court and many others have rejected this type of claim, holding COVID-19
business interruptions were due to changed conditions and circumstances that did not
result from, or cause, qualifying property loss or damage. See, e.g., Planet Sub
Holdings, Inc. v. State Auto Prop. & Cas. Ins. Co., 36 F.4th 772, 776 (8th Cir. 2022);
Monday Restaurants v. Intrepid Ins. Co., 32 F.4th 656, 658 (8th Cir. 2022); Oral
Surgeons, P.C. v. Cincinnati Ins. Co., 2 F.4th 1141, 1144 (8th Cir. 2021). In Oral
Surgeons, and in subsequent cases, we held that physical loss or damage to property
required, “some physicality to the loss or damage of property—e.g. a physical
alteration, physical contamination, or physical destruction.” 2 F.4th at 1144.
Because allegations in our earlier cases did not identify any such physical alteration,
contamination, or destruction, we found no coverage.
In an effort to distinguish its claims from those that have come before,
Lindenwood argues that it has plausibly alleged the virus was physically present on
its property and altered its property by attaching to physical surfaces and requiring
cleaning. Zurich counters that viral presence and associated increased cleaning does
not satisfy the Oral Surgeons physicality requirement. Zurich points to policy
language defining the applicable time period for time-of-loss/business-interruption
liability as being tied to the time required for repair or replacement. According to
1The Honorable Henry Edward Autrey, United States District Judge for the
Eastern District of Missouri.
-2-

-- 2 of 5 --

Zurich, this does not mean simply the time required for routine or even deep cleaning.
Zurich characterizes arguments to the contrary as attempts to convert an insurance
policy into a maintenance contract. Zurich also notes that Lindenwood did not assert
claims for restoration or cleaning costs. Lindenwood responds that, to the extent
Zurich challenges its allegations regarding the nature or extent of cleaning or
remedial steps, Zurich identifies a jury question not appropriate for resolution at the
motion-to-dismiss stage.
Our job on appeal is to interpret the insurance contract according to its plain
terms. Oral Surgeons, 2 F. 4th at 1143 (“We must construe the policy to give effect
to the intent of the parties . . . determined by the language of the policy itself, unless
there is ambiguity.” (citations omitted)). An ambiguity exists only if “genuine
uncertainty” remains as to which of two or more reasonable interpretations is proper
after a full analysis using all proper rules of interpretation. Id. And, in “[c]onstruing
an insurance policy, this court must give each term its ordinary, lay meaning unless
the policy expressly defines a term in a technical manner.” Monday Restaurants, 32
F.4th at 658 (citations omitted). In addition, we must accept Lindenwood’s well-
pleaded facts as true, but we need not give deference to conclusory allegations or bare
legal assertions. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Against this backdrop,
dismissal remains proper if Lindenwood has failed to allege sufficient facts to state
“a claim to relief that is plausible on its face.” Id. (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)).
Applying these standards, we harbor serious doubt that Lindenwood’s “viral
presence” theory satisfies the physicality requirement or that the current factual
allegations satisfy Iqbal’s plausibility standard. When previously rejecting similar
claims, our Court noted the absence of allegations regarding the physical presence of
COVID-19 at an insured’s property. See, e.g., Monday Restaurants, 32 F.4th at 658
(“Neither business alleges COVID-19 was physically present on its premises or that
anything physical happened to its properties.”). But, we have not held that
-3-

-- 3 of 5 --

allegations of the virus’s presence, standing alone, satisfy the Oral Surgeons standard.
Regardless, we need not resolve this particular aspect of the present dispute. Even
if Lindenwood’s allegations of a viral presence satisfied the “physicality”
requirement, other policy language clearly and unambiguously bars coverage in this
case.
Specifically, the policy contains a contamination exclusion that expressly
references viral contamination. By any theory consistent with Lindenwood’s
allegations, the present claims allege contamination and fall within this exclusion.
But, as a last argument, Lindenwood asserts an amendatory endorsement applies and
exempts its claims from the exclusion.
The exemption at issue is found in one of thirty-plus state-specific
endorsements—the Louisiana endorsement. The district court found, and Zurich
argues, the Louisiana endorsement is geographically limited and inapplicable to
Lindenwood’s insured property in Illinois and Missouri.
Lindenwood, however, characterizes the reference to Louisiana as a mere title
and cites a policy provision stating that “titles of the various provisions and
endorsements are solely for reference and shall not in any way affect the provisions
to which they relate.” Lindenwood also notes that the Louisiana endorsement does
not otherwise expressly state that its terms are limited solely to insured property in
Louisiana. As such, Lindenwood argues the reference to “Louisiana” is a mere title
that implies no geographic limitation and serves only as a label for the parties’
reference. In further support of this argument, Lindenwood notes that some of the
other state-specific endorsements actually include express geographic limitations
beyond the simple identification of the state. Finally, Lindenwood argues its
interpretation must be correct—or at least create an ambiguity—because Zurich has
since amended the endorsement to include an express geographic limitation.
-4-

-- 4 of 5 --

While not frivolous, we conclude that Lindenwood’s argument fails to identify
an ambiguity. In our view no lay person—no reasonable insured—could look at the
policy as a whole and fail to appreciate that the state-specific endorsements are
intended to apply in the respective states. The references to Louisiana and other
states are not mere titles; they serve to establish the structure of the policy as a whole.
And it would simply make no sense to define a contamination exclusion with express
reference to viral contamination in the main body of the policy only to wholly
eliminate that same exclusion nationwide in later endorsement that references an
individual state.
Because the viral contamination exclusion applies and the exemption does not,
we affirm the judgment of the district court.
______________________________
-5-

-- 5 of 5 --